Successful Innovation: One-Way Street or Cyclical?

The Ordway Center, home to the Saint Paul Chamber Orchestra. Credit: Mulad.

EmcArts frames the development of innovative strategies in three stages:

1. The emergence of “big ideas” from a background of no ideas
2. Moving significant strategic ideas to the point of sufficient clarity and ownership within the organization that they have a chance of being implemented
3. Getting fully shaped and supported strategies actually implemented

On this blog and in their innovation labs, EmcArts has focused on the process of getting from stage 2 to stage 3, or in other words, in getting good ideas off the ground. This is the hardest part; the leap of faith.

But what happens after innovative ideas and strategies are implemented? When should organizations attempt to measure the success of their changes, and how? If unintended consequences are inevitable, is it possible–or even desirable–to safeguard against failure?

These are questions weighing heavily on my mind in light of recent news out of the Twin Cities. The St. Paul Chamber Orchestra (SPCO), the only full-time professional chamber orchestra in the U.S. and long the model for new models, is in trouble.

Here’s the history. In 2002, facing record-low subscriptions, the SPCO board of directors and leadership undertook a major strategic planning process. As a result, the board dissolved its executive committee in 2004 and the position of Music Director was eliminated in order to establish the Artistic Partnership Model, which transferred artistic responsibilities to the SPCO musicians and a group of diverse Artistic Partners. In 2005, ticket prices to the orchestra’s Neighborhood Series were reduced to flat rates of $10 or $25, and in 2010, ticket prices for the mainstage series at the Ordway followed with reductions to $10, $25, or $40. Taken as a whole, the SPCO’s entire business model and culture was changed to reflect a commitment to democracy, accessibility, and community.

The orchestra was hailed as innovative and bold, and for good reason. In her May 2011 thesis for the Bolz Center for Arts Administration, Laura Beussman summarized the SPCO’s success as follows:

Since the SPCO began this process in 2002, its subscriptions have increased by 40%. Because of the reduced ticket prices, ticket revenue has still declined by over half a million dollars. However, the SPCO has simultaneously cut $1 million in marketing expenses, for an increase in net revenue of $482,000. The organization sold almost 30,000 more seats in FY09 compared to FY02. When examining contributed revenue, the number of subscribers that give has gone up by 45%, while the average subscriber gift size has gone up 7%. When it comes to major donors, the average board gift has more than tripled.

But in the past year, this picture of successful innovation has grown cloudy. During a visit to the Twin Cities in November 2011, then executive director Sarah Lutman maintained the importance and urgency of lower ticket prices while conceding that sales had plateaued and external support was no longer making up the difference [note: see comment from SPCO representative Jessica Etten below for clarification]. In December, the SPCO began publicly projecting a $1M deficit for the 2011-2012 season. This spring, Lutman departed to focus on consulting, and she was followed by her VP of Development, who transferred to the Cleveland Orchestra. News in June was worse: the only chamber orchestra in the U.S. with full-time salaried musicians might be going part-time, as the board seeks to cut $1.5M in musician-related expenses. The Star-Tribune article hinted that some musicians were countering with a call for increased ticket prices, suggesting the players may not have been fully supportive of the administration’s pricing strategy.

Here is an organization that thought big, carefully implemented deep change, weathered the worst of the recession, and just a year ago looked strong. That picture has changed dramatically, but were the SPCO’s changes for naught? A mission-based perspective would certainly validate the accessibility initiatives for bringing in a wider audience, but that’s come at a financial cost that could jeopardize the orchestra’s ability to perform at the highest possible level, another component of its mission.

Still, I would wager that had the SPCO tempered its changes for fear of failure, the outcome as of today would be no better, if not worse. The temporary turn-around increased the orchestra’s network of donors, greatly expanded its footprint in the community, and enhanced its reputation as a pioneer, changes that may still yield greater rewards in the future. More importantly, going through the process of innovation builds adaptive capacity, the ability to change in the future.

I had started this post thinking very logically about what a fourth stage of innovation might look like, feeling that the SPCO had worked their way through the first three and were now floundering. I thought it might have something to do with reevaluation and asking whether or not the implemented changes are working and why. That needs to happen, but I also like the idea of just going back to the first stage and starting the cycle over again. If changes have been made, depending on how deep they run, they are likely the new normal. Isn’t it time, then, for new ideas? Evaluation becomes a constant in this scenario, and if we can get comfortable with ignoring sunk costs and learning from mistakes—being nimble—then forward motion is inevitable. Any true innovation carries the risk of failure by someone’s definition. It’s the ability to begin the process anew that makes failure an option again in the future.

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Brian Hinrichs grew up playing the cello and began transitioning to the administrative side of arts organizations in college. He is interested in innovation through programming and technology, and believes strongly in the power of connecting audiences to the process of creating new works. Brian is currently an MBA candidate at the Bolz Center for Arts Administration in Madison, WI, where he works as a graduate project assistant for the Pro Arte Quartet and is researching the impact of composer-in-residence programs at American symphony orchestras. Previously, he was the director of marketing and community engagement at Madison Opera. As a Fulbright Fellow to Thailand in 2007-08, Brian explored the emerging classical music scene in Bangkok with an eye for organizations and composers fusing traditions. A 2007 graduate of Colgate University, he is originally from Bay Shore, NY. Follow @classicalive

I love your idea of a fourth stage of innovation. Certainly getting from step 2 to 3 is a large (sometimes monumental) task, but there’s something about the “long tail” of sustaining and maintaining the innovation long-term after implementation that can be even more daunting. I think it’s because in that long tail is changing organizational and patron habits and perceptions for the long haul–after the novelty of an innovative idea has worn off. There’s considerable follow-through that must occur to keep the momentum of innovation going. It’s never “over”–until it is. I can’t speculate if that was the issue here, if the model itself was not sustainable, or if SPCO has just hit a momentary downturn. But I think your line of thinking here and I almost think there’s a 4th step and then a return to step 1.

In the end, innovation should be sustainable (and sustain the organization) or conceived with an expiration date in mind–at which point we say “mission accomplished” and go on to the next thing. I’ve been inspired lately by the industry dialogue around getting away from institutional thinking (which your previous article on TMP is a perfect example) and how organizations re-invent themselves to continue to serve their communities and their artform. It’s really changed my perspective on the mission of arts organizations and their role in the cultural life of a community.

Sherry Wagner-Henry

Hi Brian,
In enjoyed reading your blog article this morning–actually caught it through You’ve Cott Mail, Thomas Cott’s daily listing of blog articles, organized by subject matter. Today’s topic was Innovation so he had listed both your July 23 post and your June 25 post (nicely done, by the way!) I focused in on the one concerning the SPCO, since that’s in my backyard and I know all the players, and as always, the second tier of leadership tells a much different water cooler story regarding the internal impacts (fatigue, lack of investment and communication with staff about new initiatives, etc.) of all the “outward” innovation that was occurring in the last five years or so–perhaps acting as an indicator regarding what appears to be an overnight collapse. Can I propose a case study presentation for your colleagues in the fall? I would love for you to share your exploration around innovation in the sector and build a whole class period around it. I could maybe even get some former SPCO folks to participate. Anyway, great to “read” you online and looking forward to continued thought leadership online and on campus this fall!

As the SPCO’s Senior Director of Marketing and Communications, I want to thank you for writing about the SPCO. You ask important questions for our field about how to evaluate change once it’s been implemented, and how to best move forward.

I wanted to correct something in your post about the SPCO’s innovation in pricing. In reference to the long term effects of lowering prices you wrote that “sales had plateaued and external support was no longer making up the difference.” This is not accurate. We lowered ticket prices to address the challenges of declining audiences, low levels of individual giving, and a weak case for support. Today we have larger audiences, a greater percentage of funding coming from individuals (from 43% of our annual fund a decade ago to 70% today), more giving in real dollars from individuals, and a much stronger case for support (“great music accessible to everyone.”) Net patron revenue (total revenue from patrons from both ticket sales and gifts less expenses associated with generating that revenue) has continued to improve each year even during the economic downturn. Lowering ticket prices has done what we hoped it would do.

That being said, the SPCO does indeed face a significant financial challenge. But this is not a challenge caused by lowering ticket prices. This is a different challenge that will also require change.

According to the Minnesota Council of Foundations, giving to the arts from institutions (corporations and foundations) declined 19 percent between 2004 and 2009. The recession that began in 2008 did not cause this shift to begin, but it hastened this shift. As a result, the SPCO’s institutional funding has declined significantly. The global recession has obviously impacted all of our revenue sources, but we can’t simply blame the recession for a broader shift that was underway well before the recession began.

The SPCO will have a deficit of up to $1 million this year because our fixed expenses are not aligned with our predictable, sustainable revenues. We are actively working on solving this challenge. It won’t be easy, but working with our musicians and our friends, we will find a solution.

– Jessica Etten

Brian Hinrichs, Blogging Fellow

Hi Jessica,
Thanks so much for reading and commenting. An e-mail will follow seeking further clarification, to make sure I have it right!
Best,
Brian

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EmcArts Inc. is a social enterprise for learning and innovation in the arts. We serve as a nonprofit intermediary for many arts funders, and as a service organization for the arts field around innovation. We exist to strengthen the capacities and effectiveness of nonprofit arts and cultural organizations, serving their needs in the design and management of innovative change, and assisting them in building their adaptive capacity. Find out more.